A startup company is the one that has just started its operation and has entered the corporate world as a new venture with some investment.
They enter the market either to solve the existing problem of the customer by manufacturing unique and innovative products or to fulfill the growing demand of a particular good or service.
We can take an example of an OYO Rooms founded by Ritesh Agarwal in 2013. It is headquartered in Gurugram, India, and is the largest and fastest-growing hospitality chain. It is one of the successful startups in India.
Let us look into some of the major topics to understand about the startup.
What’s in it for me?
- Features of Startup Company
- Types of Startup Company
- Startup vs. Small Business
- Frequently Asked Questions about Startup Company
Features of Startup Company
Many times my friends have said to me, “Hey! Let’s start a company”.
Some of them also say that “Job is not what I seek for. I cannot work under someone but will be my boss and will have my startup”.
I am sure this must be the case with you also. Your friends might also be talking about starting a company. This puts me into deep thought that, is starting a company so easy?
To understand the concept of ‘startup Company’ better let us take a look into its features:
To get a competitive edge in the market, startups should be innovative. The product that they manufacture should be innovative and problem-solving one which helps the customer to easily fulfill their needs and wants.
This is the most important aspect by which one can differentiate its company from the already existing competitors in the market. The use of today’s advanced technology will help you a lot in every aspect of your business.
You should always formulate a proper plan before initiating a company. You should do proper market research.
Decide your target market and clearly define the problem you will be solving. Decide the offering that will fulfill the needs and wants of your target market.
Also, decide where to get a business loan, and most importantly, the team members you will be working with.
Also, you should do proper research about the business environment which will play a huge role in your success or failure of the company. Do not commence your business without a proper plan else you have to face failure.
There is always a high risk of investing in a startup company. You don’t know whether it will be a success or a failure.
Yes, if you have done proper market research then it reduces the risk of failure but does not eliminate it. You should always be ready to face the adverse situations coming to your path.
A startup company should always be flexible. Meaning, if you have planned something and it does not work, then you should also have plan B ready with you.
So that you do not lose hope in the failure of your Plan A and can restart your work with a new plan. But the destination will be the same.
Also as the business environment keeps on changing, you should always have a backup in your mind to tackle every situation.
The startup company should be scalable. That means your business model is such that it has the potential to come out as a profitable business in the future.
Hence, your niche should be such that you can serve them better while earning maximum profits.
Startups should be such that it can grow and expand rapidly in the market. For example, Jio. It came into the market and expanded so rapidly due to the marketing strategy that now it dominates the telecommunication sector.
Always remember that teamwork is the most important aspect of a successful startup. You should have a team that is ready to put on their full effort to make the business successful.
They should always be ready for the adverse situation and be motivated towards their work and the company’s goal.
Types of Startup Company
People do various kinds of business. Some do just to feed their family members, some make their passion a business, some have a dream to become a millionaire, and many more.
There are majorly six types of startups. Let us dive into it, understand it thoroughly and then you find out who among these your company comes under:
Some people do things just because it’s their passion. So this is the kind of startup in which people make their passion a business. For example, many dancers start their dance institutes.
Motive – Carry out their passion
Finance – Personal savings
Marketing – Generally through social media
Human resource – Not much required because it is the person itself running the business. If required he/she may employ some.
Management requirement – Depends on the size of the business. If it is on a small scale then less management burden and if it is on a large scale then more effort to be put up in managing the day to day activities.
Small Business Startups
These are the businesses that earn to feed their families. They do not have such a motive to grow their business, enter a new market, increase their market share, etc. For example, the small stores near our house.
Motive – To feed the family
Finance – Either personal savings or loan in the initial stage.
Marketing – Through word of mouth
Human resources – Not many people are required. This kind of business comes under sole proprietorship business and hence is generally run by one person or can employ some people if required.
Management requirement – Not much effort is required.
These startups are born to capture the market and dominate the sector they are in. For example, Facebook, Google, Youtube, etc.
Motive – To keep growing
Finance – Either take loan or pitch to investors (angel investors or venture capitalist)
Marketing – A huge sum of money is invested in the marketing of these types of companies. They do it through digital marketing, sponsoring in any big event, etc.
Human resource – A lot of employees are required to do the day-to-day activities of the company.
Management requirement – Management is very important in these kinds of big companies without which it is hard to run the firm. So, generally a management expert is hired to manage the day-to-day activities of the company.
Those startups that create something new or have a large market share and sell it to the existing big corporates. For example, Flipkart was acquired by Walmart. Don’t know about Walmart? Check out our blog.
Motive – To create something new and sell it to the big companies to earn a huge sum of money
Finance – Either they take loans from banks or pitch their idea to investors.
Marketing – They generally do not spend much on marketing activity.
The reason is since they have created or developed something new which did not exist in the market, it attracts the attention of the media. They do their publicity by showing it to the world in television, newspapers, magazines, social media platforms, etc.
Management requirement – They require it in the initial stage and after selling it to the company all the management burden goes to that company who acquires it.
Large Company Startups
These are those companies that create something new and acquire a huge market share. For example, Jio. They have dominated the telecommunication sector and have entered various sectors as well such as entertainment, music, news, etc.
Motive – To dominate the market
Finance – Either take loan or pitch their idea to investors
Marketing – Huge sum of money is invested in the marketing activity. They do it both offline and online. Collaborate with other companies, sponsor in big events, etc.
Management requirement – A lot of management effort is required to run the company smoothly.
These are those startups that do not carry the motive of making any profit out of the business. They initiate it just to serve society. For example, all the NGOs work for the poor and needy to give them a better place to live in.
Motive – To make society a better place to live in
Finance – Take a loan from the bank and some money they invest it from their savings
Marketing – Take the help of social media, word of mouth, collaborate with some companies, etc.
Management requirement – It is important to manage the daily activities of the firm. They keep records of every transaction taking place.
The summary of types of the startup is given below. This will help you remember and revise the discussion quickly.
Startup vs. Small Business
Do not get confused between a startup and a small business. Both are very different terms.
A startup company is one which is born to create history, to bring something new to the market. They have the motive to grow and expand their business nationally and internationally and to dominate the market.
On the other side small business is done just to feed the family members. They do not have any such motive to grow, expand, or to dominate the market. Hence, they do not create anything new.
They choose to sell the products of the existing companies and sell only those products or services which have a huge demand in their area.
Yes, in the starting stage the startups are also small in scale. But we cannot say that they are a small business. It takes time to make it big. It depends on the vision and the mission of the owner.
I hope you all have understood the meaning of startup, its features, types, and the difference between a startup company and a small business.
It is not necessary to go to any business school and learn how to do business. The more you are exposed to the corporate world, the better you can work on your business idea.
Finally, I would like to say that do proper research before starting any business. It will be clear to you in the research stage only whether you have selected the correct niche, your target market, your business will be scalable and profitable or not, etc.
Yes, India is indeed missing a good startup ecosystem. Hence, you have to work hard to make your existence in the market.
Frequently Asked Questions about Startup Company
There any many factors to look upon to grow your business such as:
1. Proper market research
2. Selecting your target customer
3. Identify sources of fund or business loans
4. Manpower need
5. Proper management of business activities
6. Coordination between different departments
7. Motivating your employees
8. Training your employees
There are two ways in which you can raise fund for your business:
1. Make in India
2. Digital India
3. Startup India Standup India
4. MUDRA loan scheme
5. India Aspiration Fund
Other private sources:
1. Big corporate
2. Angel investors
3. Venture capitalists
4. Startup incubators
No, they are not the same. Both are very different as I have explained in the above section in what way they are different from each other.